Government Targets Over Rs. 64,000 Crores in Revenue From Spectrum Sale

"For the year 2016-17, the Ministry of Finance have set the target of Rs. 98,994.93 crores, which is inclusive of Rs. 64,580.92 crores as spectrum auction revenue," a report by the Standing Committee on Information Technology said Tuesday.

The inter-ministerial panel Telecom Commission on Saturday agreed to base prices of various frequency bands recommended by the regulator Trai for the auction to be held in July this year.

At the Trai-suggested base prices, auction of all spectrum would fetch Rs. 5.36 lakh crores to the exchequer.

The frequencies put on the block include spectrum in premium 700MHz band (4G and advance), 800MHz (2G,4G), 900MHz (3G, 4G), 1800MHz (2G,4G), 2100MHz (3G), 2300MHz (4G) and 2500MHz (4G).

As per payment rule suggested by the panel, The panel has favoured that companies winning spectrum in higher frequency bands above 1Ghz like 1800MHz, 2100MHz, 2300MHz should make 50 per cent upfront payment and rest in 10 years after a 2-year moratorium. In earlier auctions, companies were given option to make 33 percent upfront payment.

For spectrum below 1Ghz band such as 700MHz, 800MHz, 900MHz, companies will require to pay 25 percent upfront and rest in 10 years after a 2-year moratorium. It is in line with practice of earlier auctions but differs from Trai suggestion.

Telecom Ministry will seek approval of cabinet on base price and auction terms.

As per the rule approved by the inter-ministerial panel chaired by telecom secretary J S Deepak, a company interested in buying spectrum in 700MHz band will need to shell out a minimum of Rs. 57,425 crores for a block of 5MHz on pan-India basis. This band alone has the potential to fetch bids of over Rs. 4 lakh crores.

If all spectrum in 700MHz band gets sold at even Trai recommended base price, then successful bidder will need to pay over Rs. 25,000 crores after auction.

Leading operators have requested to defer sale of 700MHz spectrum, saying that ecosystem for providing services in this band was not developed and sale would lead to underutilisation of the spectrum for several years and block industry's fund.

The total potential revenue of Rs. 5.36 lakh crores from the spectrum sale is more than double of telecom services industry gross revenue of Rs. 2.54 lakh crores reported in 2014-15 financial year.